Lifted Steel Tariffs Could Spell Relief

BY BOB MIODONSKI Of CONTRACTORs staff WASHINGTON Steel-using manufacturers in the plumbing-heating-piping industry generally greeted reports of President Bushs repeal of tariffs on imported steel as good news. Bush lifted the duties on steel imports on Dec. 4 in the wake of a ruling in November by the World Trade Organization that the tariffs violated international trade agreements. After the decision

BY BOB MIODONSKI Of CONTRACTOR’s staff

WASHINGTON ¯ Steel-using manufacturers in the plumbing-heating-piping industry generally greeted reports of President Bush’s repeal of tariffs on imported steel as good news.

Bush lifted the duties on steel imports on Dec. 4 in the wake of a ruling in November by the World Trade Organization that the tariffs violated international trade agreements. After the decision by the WTO appeals board that upheld an earlier ruling, the European Union threatened to impose retaliatory duties on U.S. products, such as fruit and textiles, if the steel import tariffs were not removed.

The domestic impact of the tariffs has led to higher steel prices and a substantial loss of U.S. manufacturing jobs since Bush imposed the duties in March 2002, said Dan Elliott, A.O. Smith’s director of purchasing. The number of manufacturing jobs leaving North America has been estimated to be between 650,000 and 800,000, he noted.

“We saw dramatically increased steel prices in late 2002 and early 2003,” Elliott told CONTRACTOR. “A.O. Smith absorbed a lot of those costs at the end of last year. This year we, like everybody else, had to pass some of that along.”

With the steel tariffs removed, he said, steel prices should stabilize in 2004.

“I see stabilization,” Elliott said. “I just don’t know what the level is going to be.”

If the tariffs had not been removed, steel prices probably would have increased another 10% to 15% going into 2004, said Bob LaFata, purchasing manager at Burnham Hydronics, U.S. Boiler Co. That would be on top of the price hikes that have occurred already.

“We saw a 30% increase in steel prices last year, and another $20 per ton per month in the last quarter,” LaFata said.

Like A.O. Smith, Burnham absorbed much of the increase, he said, “because we can’t raise the price every time we get a cost increase.” Fortunately, Burnham had contracts with its major steel suppliers in place last year, LaFata said, and that helped soften the blow of the tariffs.

The comments from the producers of water heaters and boilers are in line with other steel-consuming industries. Automakers have claimed that the tariffs have raised the price of their materials, and that has led to job losses and more expensive cars and trucks for their customers.

The Bush administration had imposed the tariffs that ranged from 8% to 30% on a wide variety of steel products that it believed were being sold in the United States at below-market prices. The tariffs were supposed to give the domestic steel industry time to regroup to become more competitive with foreign producers. The WTO panel ruled, however, that the United States did not prove that steel imports were responsible for hurting domestic producers.

Not everyone believed that the tariffs should be removed. U.S. steel producers and labor unions opposed the action. Some steel-using manufacturers disagreed as well.

“I think it is a terrible thing when outsiders are telling us that we can’t have our own steel industry,” said James Coulas Sr., president of Weldbend, which makes pipe fittings and flanges. “For years, our men have strived for better working conditions, which of course has raised the price of domestic steel. Where is the loyalty of large American steel users who are crying for cheap imports? In our company requirements, domestic steel comes first. If we can’t get it here, we will look elsewhere. I believe in supporting America first, last and always.”

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